The National Association of REALTORS® was formed in 1908 and was called The National Association of Real Estate Exchanges. The Code of Ethics of the National Association of REALTORS® was first adopted on July 29, 1913, at the sixth Annual Convention of the National Association of Real Estate Exchanges (Association’s name changed in 1916 to National Association of Real Estate Boards and again in 1974 to National Association of REALTORS®). The Code was first adopted as “Rules of Conduct” to be recommended to real estate boards for voluntary adoption. Compliance with the Code was made a condition of membership in the National Association in 1924, and has remained so to date.

The Bylaws of the National Association, Article IV, Code of Ethics and Member Board Business Practices, state:

Section 1. Each Member Board shall adopt the Code of Ethics of the National Association as a part of its governing regulations for violation of which disciplinary action may be taken.

Adoption of the Code of Ethics includes responsibility for providing applicant/new member Code of Ethics orientation and ongoing member ethics training that satisfies the learning objectives and minimum criteria established by the National Association from time to time.

Section 2. Any Member Board which shall neglect or refuse to maintain and enforce the Code of Ethics with respect to the business activities of its members may, after due notice and opportunity for hearing, be expelled by the Board of Directors from membership in the National Association. Enforcement of the Code of Ethics also requires Member Boards to share with the state real estate licensing authority final ethics decisions holding REALTORS® in violation of the Code of Ethics in instances involving real estate related activities and transactions where there is reason to believe the public trust may have been violated. The “public trust”, as used in this context, refers to demonstrated misappropriation of client or customer funds or property, discrimination against the protected classes under the Code of Ethics, or fraud. Enforcement of the Code of Ethics also requires Member Boards to provide mediation and arbitration services to members and their clients so that the dispute resolution requirements of Article 17 of the Code of Ethics can be met. (Revised 1/21)

Enforcement of the Code of Ethics also includes responsibility for ensuring that persons primarily responsible for administration of enforcement procedures have successfully completed training that meets the learning objectives and minimum criteria established by the National Association from time to time.

Enforcement of the Code of Ethics also prohibits Member Boards from knowingly granting REALTOR® or REALTOR-ASSOCIATE® membership to any applicant who has an unfulfilled sanction pending which was imposed by another Board or Association of REALTORS® for violation of the Code of Ethics.

The charter revocation procedures that may be invoked should an allegation be made that a Board has failed to enforce the Code of Ethics may be found on and in Appendix VIII to Part Four, The Ethics Hearing, of this Manual.

The establishment of a Code of Ethics recognizing high standards of business practice and professional conduct by real estate practitioners was a primary reason for the establishment of the National Association in 1908. Men of integrity wanted to ensure honorable, faithful, and competent service to clients, customers, and other members of the public. They believed that through their collective efforts the ends of national policy and the general welfare could be served. The history of their early meetings clearly reflects the desire to avoid careless “horseback” or uninformed advice to those who relied upon them and to avoid the use of special knowledge to prey upon the unsuspecting and unsophisticated. They sought to make the broker recognize the truly fiduciary relationship the broker has with the client and to assure service of a professional quality in all respects. They had an awareness, too, that a voluntary commitment to peer review by knowledgeable, informed men and women sharing the same commitment had immeasurable advantages over resort to courts of law and equity. Most of all, they recognized that self-discipline in the interest of protecting the public was not inconsistent with the preservation of a competitive marketplace.

Author Pearl Janet Davies in her History of Real Estate in America records that Edward S. Judd, 1912 President of the National Association, in accepting the presidency, “asked for a formal commitment by the voting body to a specific, written Code of Ethics. Himself a lawyer, he described the projected Code as ‘similar to that of the American Bar Association’ then recently approved and adopted by many local Bar Associations. ‘A Committee on the Code of Ethics,’ he announced, ‘is expected to report at the next Convention for adoption and recommendation to all local Boards a definite Code of Ethics, a Code which shall be as the Ten Commandments to the real estate fraternity.’” Author Davies notes that the following year, on July 29, 1913, it was Judd who put the motion for the Code. “The motion,” he said, “is for the adoption of the Rules of Conduct and that a recommendation be sent to the local Boards that they be adopted as much as possible; and they be taken as the Code of Ethics of the National Association, and their adoption recommended everywhere as far as possible.” The motion was carried by voice vote amidst applause. A delegate rose to say, “We have heard many important things here, but nothing else is so important as the adoption of this resolution.” Thus, according to Pearl Davies, “The national real estate organization may claim to be the second trade or business group in the United States to follow examples of the professions of medicine, law, and engineering in formulating a Code of Ethics.”

The first paragraph of that historic code for real estate practice, adopted in 1913, established the tone for the 23 separate ethical precepts which followed and for all subsequent versions of the Code. It read: “The real estate agent should be absolutely honest, truthful, faithful, and efficient. He should bear in mind that he is an employee—that his client is his employer and is entitled to the best service the real estate man can give—his information, talent, time, services, loyalty, confidence, and fidelity.”

The Code of Ethics of the National Association has survived as a viable and relevant guide because it is a living document. As times have changed, new needs and insights have been recognized and, as the law has developed, the Code has been amended. It has been amended approximately 53 times since its adoption. The amendments all have reflected an interest in refining, on a continuing basis, the principles obligating REALTORS® and REALTOR-ASSOCIATE®s to the highest and best standards of personal and professional conduct in their practice of real estate. Such amendments have sought to simplify, clarify, and amplify the ethical principles established to preclude antisocial business practices and to accommodate current legal, cultural, and national perspectives.

The Code of Ethics and Standards of Practice were amended in 1914, 1915, 1924, 1928, 1950, 1952, 1955, 1956, 1961, 1962, 1974, 1975, 1976, 1977, 1980, 1982, 1984, 1985, 1986, 1987, 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2015, 2017, 2018, 2019, 2020, 2021 and 2022. The Standards of Practice were first adopted in 1975; before then, there were only Articles. The Standards of Practice were printed separately from the Articles from 1975 through 1984, all Articles appearing first and all Standards of Practice following. It wasn’t until 1985 that the Standards of Practice and Articles were integrated with the relevant Standards of Practice following each Article.

With all the amendments, however, the philosophical premise of the Code has remained unchanged and is reflected in the Preamble. That premise is that the interest of the nation and its citizens “. . . impose obligations [upon the REALTOR®] beyond those of ordinary commerce. They impose grave social responsibility and a patriotic duty to which REALTORS® should dedicate themselves, and for which they should be diligent in preparing themselves. REALTORS®, therefore, are zealous to maintain and improve the standards of their calling and share with their fellow REALTORS® a common responsibility for its integrity and honor. The term REALTORS® has come to connote competency, fairness, and high integrity in business relations. No inducement of profit and no instruction from clients can ever justify departure from this ideal.”

In keeping with this philosophical premise, REALTORS® having direct personal knowledge of conduct that may violate the Code of Ethics involving misappropriation of client or customer funds or property, willful discrimination, or fraud resulting in substantial economic harm, bring such matters to the attention of the appropriate Board or Association of REALTORS®.

Any Code of Ethics is meaningless unless it can be clearly understood by those who must live by it. To interpret and support the Code, the Professional Standards Committee of the National Association has adopted Standards of Practice which are “interpretations” of the Code. Such Standards of Practice are applications of ethical principles to specific conduct in specific circumstances as related to one or more Articles of the Code of Ethics.

To assist with the proper application of the Code of Ethics and Standards of Practice, approximately 153 different numbered case interpretations are set forth comprehensively in this publication.

The numbered Case Interpretations are of particular significance. These cases are intended to be used much like decisions in judicial proceedings. That is, they are specific and factual situations involving charges of alleged unethical conduct by REALTORS® and/or REALTOR-ASSOCIATE®s and provide insight into the proper form of complaint, the procedures of a Board of REALTORS® in processing the complaint to ensure due process, and the rationale of the peer judgment rendered in each case. These cases do not detail the specific sanction imposed. This is because any sanction must always fit the offense and must involve every consideration of justice, equity, and propriety. Because of this, a wide range of sanctions are available to vindicate violations of the Code. Such sanctions include:

  1. Letter of Warning with copy to be placed in member’s file;
  2. Letter of Reprimand with copy to be placed in member’s file;
  3. Requirement that member attend the ethics portion of the Board Indoctrination Course or other appropriate course or seminar specified by the Hearing Panel which the respondent could reasonably attend, taking into consideration cost, location, and duration;
  4. Appropriate and reasonable fine not to exceed $15,000 (Amended 5/13);
  5. Membership of individual suspended for a stated period not less than thirty (30) days nor more than one (1) year, with automatic reinstatement of membership in good standing at the end of the specified period of suspension. The thirty (30) day minimum and one (1) year maximum do not apply where suspension is imposed for a remediable violation of a membership duty (e.g., failure to pay dues or fees or failure to complete educational requirements). The Directors may order suspension unconditionally, or they may, at their discretion, give the disciplined member the option of paying to the Board, within such time as the Directors shall designate, an assessment in an amount fixed by the Directors, which may not exceed $15,000 and which can be utilized only once in any three (3) year period, in lieu of accepting suspension. But, if the conduct for which suspension is ordered consists of failure to submit a dispute to arbitration, the Directors may not permit the disciplined member to avoid suspension without submitting to the arbitration in addition to paying the assessment, unless in the meanwhile the dispute has been submitted to a court of law without any objection by any party that it should be arbitrated; (Amended 11/13)
  6. Expulsion of individual from membership with no reinstatement privilege for a specified period of one (1) to three (3) years, with reinstatement of membership to be by application only after the specified period of expulsion on the merits of the application at the time received (decision should be written clearly articulating all intended consequences, including denial of MLS participatory or access privileges); (Amended 4/96)
  7. Suspension or termination of MLS rights and privileges may also be utilized. Suspension of MLS services may be no less than thirty (30) days nor more than one (1) year; termination of MLS services shall be for a stated period of one (1) to three (3) years; (Amended 5/02)
  8. REALTORS® who are not members of a Board from which they purchase the multiple listing service and their users and subscribers remain obligated under the Code of Ethics on the same terms and conditions as REALTOR® and REALTOR-ASSOCIATE®members of that Board. Discipline that may be imposed may be the same as but shall not exceed the discipline that may be imposed on that Board’s members. Boards entering into regional or reciprocal MLS agreements are encouraged to include provisions requiring signatory Boards to respect, to the extent feasible, decisions rendered by other Boards involving suspension or expulsion from membership or from MLS. (Amended 4/96)
  9. Members may also be required to cease or refrain from continued conduct deemed to be in violation of the Code, or to take affirmative steps to ensure compliance with the Code, within a time period to be determined by the hearing panel. Where discipline is imposed pursuant to this subsection, the decision should also include additional discipline (e.g. suspension or termination of membership) that will be imposed for failure to comply by the date specified, and to continue to comply for a specified period not to exceed three (3) years from the date of required compliance. (Adopted 05/14)

In addition to imposing discipline, the Hearing Panel can also recommend to the Board of Directors that the disciplined member be put on probation. Probation is not a form of discipline. When a member is put on probation the discipline recommended by the Hearing Panel is held in abeyance for a stipulated period of time not longer than one (1) year. Any violation of the Code of Ethics which occurs during the probationary period may, at the discretion of the Board of Directors, result in the imposition of the suspended discipline. Absent any violation during the probationary period, both the probationary status and the suspended discipline are considered fulfilled, and the member’s record will reflect the fulfillment. The fact that one or more forms of discipline will be held in abeyance during the probationary period does not bar imposition of other forms of discipline which will not be held in abeyance. (Revised 11/23)

In addition to any discipline imposed, Boards and Associations may, at their discretion, impose administrative processing fees not to exceed $500 against respondents found in violation of the Code of Ethics or other membership duties. Any administrative processing fee will be in addition to, and not part of, any disciplinary sanction imposed. Boards and Associations shall determine in advance when, and under what circumstances, administrative processing fees will be imposed so that imposition is a matter of administrative routine. (Revised 5/13)

Acceptance of a Code of Ethics by the membership depends on its fair, reasonable, and impartial enforcement. Strict attention must be given to the requirements of due process. Acceptance of the Code must never involve a sacrifice of the right to counsel or of any other procedural safeguard. Consistent with this concept, the National Association has required each Member Board to establish a standing Professional Standards Committee and to establish appropriate Professional Standards procedures in its governing documents. The Association provides and recommends to Member Boards the adoption of the Code of Ethics and Arbitration Manual of the National Association, as reviewed and adapted by local legal counsel to conform to and comply with local law.

The Code of Ethics and Arbitration Manual contains approved provisions relating to enforcement of the Code of Ethics and arbitration of business disputes for inclusion in the bylaws of local Boards of REALTORS®. For ease of reference, the Manual contains separate sections covering Ethics and Arbitration.

Material covered in these sections includes:

  • Part One—Ethics General Provisions and Part Seven— Arbitration General Provisions contain such things as definitions of terms, qualification for tribunal, and so forth.
  • Part Two and Part Eight, Membership Duties and Their Enforcement, describe, among other things, the duties of membership, power to take disciplinary action, the nature of discipline, and the establishment of Board Grievance Committees and Professional Standards Committees.
  • Part Three and Part Nine, The Grievance Committee, describe the authority and appropriate function of the Grievance Committee in reviewing ethics complaints and arbitration requests.
  • Part Four—The Ethics Hearing explains the method of handling an ethics complaint from the time of original receipt through proper processing and hearing to final action by the Board in respect of the complaint.
  • Part Ten—Arbitration of Disputes deals with the arbitration of business disputes between REALTORS® associated with different firms arising out of their relationship as REALTORS®, and with arbitration of certain other disputes subject to prescribed conditions explained in Section 44 of Part Ten. If this Manual is not adopted, the Board is nevertheless required to have local legal counsel review procedures as adopted and certify that this review assures the Board’s procedures accord due process and are consistent with the requirements of applicable law. (Further, as noted on the title page of this Manual, professional standards procedures of Member Boards must reflect substantively the approved due process policies and procedures of this Manual in order to ensure Board entitlement to coverage by the Professional Liability Insurance Policy of the National Association in litigation involving the Board in connection with Board enforcement of the Code of Ethics, provided that such policies and procedures are consistent with applicable state law.)
  • Part Fourteen—State Association Professional Standards Committee describes the function, jurisdiction, and responsibilities of the State Association Professional Standards Committee as to Code enforcement, including arbitration of contractual, and specific non-contractual, disputes under certain specified circumstances.
  • Part Eleven—Interboard Arbitration tells how interboard arbitration may be handled.
  • Part Five and Part Twelve—Conduct of an Ethics or Arbitration Hearing provide a detailed procedural guide for the conduct of an Ethics or Arbitration Hearing.
  • Part Six and Part Thirteen—Specimen Forms provide forms (or, more accurately, “formats”) which are recommended to Boards for their use in the processing of ethics complaints and arbitration requests.

Since the adoption of the Code of Ethics of the National Association in 1913, thousands of disciplinary hearings and arbitration hearings have been conducted by REALTORS® in the interest of protecting the public. The objective of such hearings in each case was to promote honesty, integrity, fairness, and competency, and to resolve controversies on the basis of the informed judgment of one's peers. The hearings have provided justice that has been both timely and economic. They have relieved overburdened civil courts and yet have resolved charges against REALTORS® effectively and without the distortion and injury to reputation that so often attends litigation. In January 1982, Chief Justice Warren Burger of the U.S. Supreme Court strongly endorsed arbitration as an alternative to litigation to resolve controversies. This basic principle has been followed by REALTORS® and REALTOR-ASSOCIATE®s of America for many years.

Article 14 of the Code of Ethics obligates REALTORS® and REALTOR-ASSOCIATE®s to place all pertinent facts before the proper tribunal of the Member Board or any institute, society, or council of which they are members if they are charged with unethical practice or are asked to present evidence in any disciplinary proceeding or investigation. The REALTOR® or REALTOR-ASSOCIATE® is expected to abide by the decision of the Board as rendered, once all appeal remedies have been exhausted. If a member refuses to accept a disciplinary decision after appeal, even then, before imposing the sanctions of suspension or expulsion, the Board will, if there remains any doubt as to the legal propriety of the judgment, make such sanctions effective only upon entry of final judgment in a court of competent jurisdiction in a suit by the Board for declaratory judgment declaring that the suspension or expulsion violates no rights of the member.

As a viable, living, developing guide for REALTORS®, the Code will continue to provide the protection the public deserves and requires. The NATIONAL ASSOCIATION OF REALTORS® and the respective State Associations and Member Boards of REALTORS® are committed and pledged to such protection.